Capitalism & Long Term, Broad-based Prosperity, Part Two
In 1970 the Vietnam War was raging and U.S. military forces were
deployed around the world, with more than 250,000 being stationed just in
Europe. The U.S. military in 1970 totaled more than 3 million (active)
men and women. By 1975 that number had dropped by almost a million. In
1995 the total was just above 1.5 million, and since 1996 the total
number has been "around" 1.4 million; that is, less than half the total
in 1970.
In 1970, the unemployment rate in January was 3.9%, but it had climbed to 6.1% by the end of the year. In 1975 unemployment was 8.1% in January and 8.2% at the end of the year. When Ronald Reagan took office for his second term in January 1985, the unemployment rate was 7.3% and was 7.0% by the end of the year, and 5.4% when he left office. When Bill Clinton took the oath for his second term, unemployment was 5.6% and was the exact same rate at the end of the year, and 4.2% when he left office. When George W. Bush took office for his second term in January 2005, unemployment was 5.3% and 4.9% at the end of the year, and was 7.8% when he left office.*
Critics of capitalism over time have contended that the economic system heavily benefits those lucky enough to get to the top, or those already there by birth, and that capitalism can't provide long term, broad-based prosperity without large scale war to bolster the economy. Nothing I publish here, now or in the future, will resolve that debate, but hopefully you will come away with an understanding of the debate, although the idea that those born into wealthy families having a DECIDED advantage over others is hardly in dispute, except for perhaps some on the right, who seem to view this as an "entitlement."** The direction of the economy can be influenced by a number of factors, not just wars, but as can be seen in the numbers above, the American military has been relatively stable in numbers for quite a long period. Any war where you risk your life is a major war, but in terms of numbers, the wars and military actions since Vietnam have not involved as large a number of troops as that war, which itself didn't compare to the huge military commitment of World War Two, when more than 16 million Americans served in the military. In 1944, when U.S. forces and the American economy were both fully engaged in World war Two, unemployment was about 1%.***
So, as the American military scaled back, unemployment has bounced around, and unemployment has even dropped to fairly low levels at times, but only temporarily, and income disparity has increased. After 9/11, President George W. Bush ordered an invasion of Afghanistan, followed not long thereafter by an invasion of Iraq. Any effect on unemployment seems to have been little, if any, but there was not an increase in the overall number of Americans in the military, nor did the country require a huge build up in military goods and equipment. If we, or any other country, concentrate on building loads of military goods, even, or especially, in times of relative peace, when do we begin to look like Nazi Germany? When Hitler took power, he used a number of things, like public works projects, to help the German economy rebound from the Great Depression. Later he shifted much of the effort into both the expansion of the German military in manpower and weaponry.****
Purist capitalism has lots of rough edges, and, in my opinion, they have to be filed down in order to have reasonable periods of prosperity for many and not just the few. Business people resist hiring, by nature; after all, if you own or have owned a business, do (did) you just go out and hire people without the business to sustain such employment? The notion by some that there is (or has been) some sort of conspiracy by business people to keep unemployment high just doesn't wash with me. With some nutcase right wing business people? Maybe, but the desire to make money is too strong for most people, and that includes us further down the income scale.
When Ronald Reagan was in office, unemployment dropped from nearly 11% about midway in Reagan's first term to 5.4% when he left office in January 1989, BUT there were huge deficits run every year of his presidency. Now, I'm not against Keynesian economic policies in their proper place, but Reagan "claimed" to be a conservative. Ever since, conservatives have tried to give Reagan credit for the drop in unemployment, but place the blame for the huge deficits on Democrats. This is an attempt to have it both ways, or actually, multiple ways. Conservatives argued that the New Deal spent money foolishly and that it did not end the Great Depression. They then turned right around (no pun intended) and said that the huge spending and deficits of World War Two ended the economic downturn. Either increased government spending helps or it doesn't. Pick one, please! With Reagan, huge government deficits helped reduce unemployment, but then conservatives blamed the deficits on Democrats, claiming Reagan's tax cuts saved the economy (conveniently leaving out the number of times taxes were raised under Reagan) and that tax cuts "pay for themselves;" thus not increasing the deficit. With such huge deficit spending an issue, the Reagan administration then argued "the deficits don't matter." Conservatives continued to blame Democrats for the deficits, always saying "Democrats blocked Reagan on budget cuts." Nonsense! Reagan had "working majorities" in Congress much of the time; after all, that's how he got a number of things passed. The fact is, he NEVER proposed a balanced budget, nor did he indicate how a balanced budget should be achieved. My overall point here is, you can't claim purist "capitalism" brought unemployment down, rather huge government outlays and Reagan's military build-up (which took much of the added spending) did so, or at least had much to do with lowering the unemployment rate. If you worked in an industry that benefited from military production, you too benefited, but the 1980s saw an overall decline in the middle class, as unions lost favor,***** indeed hastened by Reagan's anti-union policy, which began to give American business a grip on the country which has only increased incredibly since then.
So my answer is, no, purist capitalism cannot produce long term, broad-based prosperity. Purist capitalism may well need help from wars, although the kinds of wars that produce mass employment seem to be a thing of the past. Capitalism needs help in reducing income disparity and in keeping it from self destruction, and that means it then is not "purist" capitalism, although today's Republicans seem bound and determined to take the country down the road to purity. That is a dangerous path for us, and for capitalists.
* Statistics are from the Department of Labor/Bureau of Labor Statistics.
** "If" concerted efforts by Republicans to repeal inheritance taxes on the wealthiest Americans succeed, this will indeed become even more of an "entitlement" than it is now. Even some very wealthy Americans fear this will establish a true "aristocracy" in America in place of a "meritocracy;" that is, a system where a person is rewarded by their merits (achievements). An "aristocracy" is a system where people of wealth and high social standing rule by inheritance, regardless of any achievement, or perhaps, even in spite of any achievement.
*** It would be interesting to know who made up this 1% (we know who makes up the 1% in today's jargon; the wealthiest Americans), as labor was in such short supply during the World War Two, that many women who were previously out of the labor force took jobs, some of which had been seen as "man's work," in factories that produced military goods. "Rosie the Riveter" became a popular song and poster figure representing American women working for the war effort.
**** Some would undoubtedly argue that Hitler even used the public works projects to plan for military actions, and I would agree, BUT better highways, railways, ports, and waterways do not HAVE to be used solely for military purposes. As a kid I recall some people talking about America's then developing interstate highway system as being for war (it was the Cold War era). Defense planning was undoubtedly taken into consideration as part of the program, but not exclusively, and it would have been irresponsible not to consider such measures, but by the time of interstates, the idea of some mass invasion of America by conventional forces was lessening, as long-range missiles had become the concern. Hitler, on the other hand, was able to mask his aggressive military plans in eastern Europe, to some degree, with Germany's Autobahn system being seen as a measure to bring Germany more into the automotive age, which was undoubtedly part of the plan, too. The Autobahns were then coupled with plans to build an affordable car for Germans, the Volkswagen. The mass production of the Volkswagen, however, was interrupted by the war and did not take place until the postwar period. Militarily Hitler faced a problem not historically unique to German leaders; potentially hostile forces on both Germany's eastern (Poland, Czechoslovakia, Soviet Union) and western (France and probably Britain) borders. Improved transportation between Germany's border areas would allow him to shuttle troops to either border much more quickly, something that indeed happened during World War Two. Hitler's pact with Mussolini secured Germany's southern border, which by 1938 included Austria, thus making the southern border directly up against Italy.
***** Not every decline in unions or in the middle class can be pinned on Reagan, as some things were "in motion" when he took office, but his policies certainly seemed to make a bad situation worse.
WORD HISTORY:
Broad-The origins of this fairly common word are unknown; in fact, its forms are only found in the Germanic languages. Old Germanic had "braidaz," which meant "spacious, wide." This gave Old English (Anglo-Saxon) "brad," with a long 'a' sound, and with the same general meaning. This then became "brode," before the modern version. The expression that something is "as broad as it is wide" is certainly true, because "broad" and "wide" really mean the same thing. The noun slang form for "a woman" started in the early 20th Century in America, but the exact reason is uncertain, although some attribute it to "broad hips." Common in the other Germanic languages: German has "breit," Low German Saxon has "breet," West Frisian and Dutch have "breed," East Frisian, Swedish, Norwegian and Danish all have "bred," and Icelandic has breithur. Like their English relative, these all mean "broad, wide."
In 1970, the unemployment rate in January was 3.9%, but it had climbed to 6.1% by the end of the year. In 1975 unemployment was 8.1% in January and 8.2% at the end of the year. When Ronald Reagan took office for his second term in January 1985, the unemployment rate was 7.3% and was 7.0% by the end of the year, and 5.4% when he left office. When Bill Clinton took the oath for his second term, unemployment was 5.6% and was the exact same rate at the end of the year, and 4.2% when he left office. When George W. Bush took office for his second term in January 2005, unemployment was 5.3% and 4.9% at the end of the year, and was 7.8% when he left office.*
Critics of capitalism over time have contended that the economic system heavily benefits those lucky enough to get to the top, or those already there by birth, and that capitalism can't provide long term, broad-based prosperity without large scale war to bolster the economy. Nothing I publish here, now or in the future, will resolve that debate, but hopefully you will come away with an understanding of the debate, although the idea that those born into wealthy families having a DECIDED advantage over others is hardly in dispute, except for perhaps some on the right, who seem to view this as an "entitlement."** The direction of the economy can be influenced by a number of factors, not just wars, but as can be seen in the numbers above, the American military has been relatively stable in numbers for quite a long period. Any war where you risk your life is a major war, but in terms of numbers, the wars and military actions since Vietnam have not involved as large a number of troops as that war, which itself didn't compare to the huge military commitment of World War Two, when more than 16 million Americans served in the military. In 1944, when U.S. forces and the American economy were both fully engaged in World war Two, unemployment was about 1%.***
So, as the American military scaled back, unemployment has bounced around, and unemployment has even dropped to fairly low levels at times, but only temporarily, and income disparity has increased. After 9/11, President George W. Bush ordered an invasion of Afghanistan, followed not long thereafter by an invasion of Iraq. Any effect on unemployment seems to have been little, if any, but there was not an increase in the overall number of Americans in the military, nor did the country require a huge build up in military goods and equipment. If we, or any other country, concentrate on building loads of military goods, even, or especially, in times of relative peace, when do we begin to look like Nazi Germany? When Hitler took power, he used a number of things, like public works projects, to help the German economy rebound from the Great Depression. Later he shifted much of the effort into both the expansion of the German military in manpower and weaponry.****
Purist capitalism has lots of rough edges, and, in my opinion, they have to be filed down in order to have reasonable periods of prosperity for many and not just the few. Business people resist hiring, by nature; after all, if you own or have owned a business, do (did) you just go out and hire people without the business to sustain such employment? The notion by some that there is (or has been) some sort of conspiracy by business people to keep unemployment high just doesn't wash with me. With some nutcase right wing business people? Maybe, but the desire to make money is too strong for most people, and that includes us further down the income scale.
When Ronald Reagan was in office, unemployment dropped from nearly 11% about midway in Reagan's first term to 5.4% when he left office in January 1989, BUT there were huge deficits run every year of his presidency. Now, I'm not against Keynesian economic policies in their proper place, but Reagan "claimed" to be a conservative. Ever since, conservatives have tried to give Reagan credit for the drop in unemployment, but place the blame for the huge deficits on Democrats. This is an attempt to have it both ways, or actually, multiple ways. Conservatives argued that the New Deal spent money foolishly and that it did not end the Great Depression. They then turned right around (no pun intended) and said that the huge spending and deficits of World War Two ended the economic downturn. Either increased government spending helps or it doesn't. Pick one, please! With Reagan, huge government deficits helped reduce unemployment, but then conservatives blamed the deficits on Democrats, claiming Reagan's tax cuts saved the economy (conveniently leaving out the number of times taxes were raised under Reagan) and that tax cuts "pay for themselves;" thus not increasing the deficit. With such huge deficit spending an issue, the Reagan administration then argued "the deficits don't matter." Conservatives continued to blame Democrats for the deficits, always saying "Democrats blocked Reagan on budget cuts." Nonsense! Reagan had "working majorities" in Congress much of the time; after all, that's how he got a number of things passed. The fact is, he NEVER proposed a balanced budget, nor did he indicate how a balanced budget should be achieved. My overall point here is, you can't claim purist "capitalism" brought unemployment down, rather huge government outlays and Reagan's military build-up (which took much of the added spending) did so, or at least had much to do with lowering the unemployment rate. If you worked in an industry that benefited from military production, you too benefited, but the 1980s saw an overall decline in the middle class, as unions lost favor,***** indeed hastened by Reagan's anti-union policy, which began to give American business a grip on the country which has only increased incredibly since then.
So my answer is, no, purist capitalism cannot produce long term, broad-based prosperity. Purist capitalism may well need help from wars, although the kinds of wars that produce mass employment seem to be a thing of the past. Capitalism needs help in reducing income disparity and in keeping it from self destruction, and that means it then is not "purist" capitalism, although today's Republicans seem bound and determined to take the country down the road to purity. That is a dangerous path for us, and for capitalists.
* Statistics are from the Department of Labor/Bureau of Labor Statistics.
** "If" concerted efforts by Republicans to repeal inheritance taxes on the wealthiest Americans succeed, this will indeed become even more of an "entitlement" than it is now. Even some very wealthy Americans fear this will establish a true "aristocracy" in America in place of a "meritocracy;" that is, a system where a person is rewarded by their merits (achievements). An "aristocracy" is a system where people of wealth and high social standing rule by inheritance, regardless of any achievement, or perhaps, even in spite of any achievement.
*** It would be interesting to know who made up this 1% (we know who makes up the 1% in today's jargon; the wealthiest Americans), as labor was in such short supply during the World War Two, that many women who were previously out of the labor force took jobs, some of which had been seen as "man's work," in factories that produced military goods. "Rosie the Riveter" became a popular song and poster figure representing American women working for the war effort.
**** Some would undoubtedly argue that Hitler even used the public works projects to plan for military actions, and I would agree, BUT better highways, railways, ports, and waterways do not HAVE to be used solely for military purposes. As a kid I recall some people talking about America's then developing interstate highway system as being for war (it was the Cold War era). Defense planning was undoubtedly taken into consideration as part of the program, but not exclusively, and it would have been irresponsible not to consider such measures, but by the time of interstates, the idea of some mass invasion of America by conventional forces was lessening, as long-range missiles had become the concern. Hitler, on the other hand, was able to mask his aggressive military plans in eastern Europe, to some degree, with Germany's Autobahn system being seen as a measure to bring Germany more into the automotive age, which was undoubtedly part of the plan, too. The Autobahns were then coupled with plans to build an affordable car for Germans, the Volkswagen. The mass production of the Volkswagen, however, was interrupted by the war and did not take place until the postwar period. Militarily Hitler faced a problem not historically unique to German leaders; potentially hostile forces on both Germany's eastern (Poland, Czechoslovakia, Soviet Union) and western (France and probably Britain) borders. Improved transportation between Germany's border areas would allow him to shuttle troops to either border much more quickly, something that indeed happened during World War Two. Hitler's pact with Mussolini secured Germany's southern border, which by 1938 included Austria, thus making the southern border directly up against Italy.
***** Not every decline in unions or in the middle class can be pinned on Reagan, as some things were "in motion" when he took office, but his policies certainly seemed to make a bad situation worse.
WORD HISTORY:
Broad-The origins of this fairly common word are unknown; in fact, its forms are only found in the Germanic languages. Old Germanic had "braidaz," which meant "spacious, wide." This gave Old English (Anglo-Saxon) "brad," with a long 'a' sound, and with the same general meaning. This then became "brode," before the modern version. The expression that something is "as broad as it is wide" is certainly true, because "broad" and "wide" really mean the same thing. The noun slang form for "a woman" started in the early 20th Century in America, but the exact reason is uncertain, although some attribute it to "broad hips." Common in the other Germanic languages: German has "breit," Low German Saxon has "breet," West Frisian and Dutch have "breed," East Frisian, Swedish, Norwegian and Danish all have "bred," and Icelandic has breithur. Like their English relative, these all mean "broad, wide."
Labels: capitalism, deficit spending, English, etymology, Germanic languages, income disparity, inheritance tax, military personnel, Ronald Reagan, Rosie the Riveter, the New Deal, unemployment, Vietnam War, World War Two
posted by Randy at 2:05 PM
4 Comments:
I tend to agree. Capitalism cant do it without help. So 'broad' is a Germanic creation?
I too agree. Actually I think it is obvious.
Johnnie, I can't tell you with any certainty that "broad" is a word created by Germanic, only that it appears only in the Germanic languages. A couple of thousand years ago, who knows?
great figures to gain some perspective. I don't think capitalism can create broad prosperity either, capitalists are too greedy always wanting as much as possible, not willing to take a little less for other's benefit. wars no longer employee like they did for conventional wars, so the hell with wars anyway!
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